When you become eligible for Medicare, one of the first important decisions you’ll need to make is choosing a supplemental plan. But with options like Medicare Supplement and Medicare Advantage Plans, it can be difficult to understand the differences between these types of coverage. Medicare Supplement Plans, also known as Medigap Plans, are administered by private insurance companies and are designed to fill in many of the gaps left by Original Medicare like deductibles, copays and coinsurance.
Alternatively, Medicare Advantage Plans, also called Part C plans, are ran by private insurers approved by Medicare that typically provide the same benefits as Original Medicare as well as additional benefits not offered under Original Medicare such as vision, hearing or dental. This guide will walk you through the key variances between Medicare Supplement versus Advantage Plans, including coverage options, premium costs and provider networks so you can determine which supplemental plan choice best suits your needs and budget as a Medicare enrollee.
What is Medicare?
Medicare is a federal health insurance program that provides health coverage for Americans aged 65 and older, as well as younger people with certain disabilities or conditions. The program is administered by the Centers for Medicare & Medicaid Services (CMS) and consists of different parts that cover specific services. Understanding the basics of Medicare is important when evaluating Medicare Supplement and Medicare Advantage Plans.
Understanding the basics of Medicare
The Original Medicare program consists of Part A and Part B. Medicare Part A covers hospital insurance including inpatient care, skilled nursing facilities, hospice care, and some home health services. Medicare Part B covers medical insurance including doctor visits, outpatient care, preventive services, durable medical equipment, and mental health services.
Most people do not pay a premium for Part A since enough Medicare taxes were paid while working. However, there is a premium for Part B that covers about 25% of the costs with enrollees paying the remaining amount.
In addition to Parts A and B, there are also Part C (Medicare Advantage Plans) and Part D (prescription drug coverage). These parts are provided by private insurance companies approved by Medicare.
Exploring different parts of Medicare
- Medicare Part A (Hospital Insurance) – Covers inpatient hospital visits, skilled nursing facility care, hospice care, and some home health services.
- Medicare Part B (Medical Insurance) – Covers doctor visits, outpatient care, preventive services, mental health services, durable medical equipment, and more. Requires a monthly premium.
- Medicare Part C (Medicare Advantage) – Private insurance plans that provide all Part A and Part B coverage. May include prescription drug coverage.
- Medicare Part D (Prescription Drug Coverage) – Standalone prescription drug coverage plans offered by private insurers. Requires a monthly premium.
- Medicare Supplement (Medigap) – Supplemental insurance policies sold by private companies to fill gaps in Original Medicare coverage.
Medicare Advantage Plans
Medicare Advantage Plans play an important role in healthcare coverage for many Medicare beneficiaries. Here is an overview of what Medicare Advantage Plans are, how they work, and their pros and cons.
What are Medicare Advantage Plans?
Medicare Advantage Plans are a type of Medicare health plan offered by private insurance companies. Also known as Medicare Part C, Medicare Advantage provides an alternate way for beneficiaries to receive their Medicare benefits. These plans include all coverage provided under Part A and Part B and often include prescription drug coverage under Part D as well.
In Medicare Advantage, the government pays the plan a fixed monthly payment per enrollee to provide care. Medicare Advantage Plans must cover medically necessary services but can do so with different rules, costs, and restrictions compared to Original Medicare.
How do Medicare Advantage Plans work?
- Enrollees must pay their monthly Medicare Part B premium.
- Additional premiums may be charged by the Medicare Advantage Plan for coverage.
- Plans provide all Medicare Part A and Part B covered services.
- Many plans offer extra benefits like vision, hearing, dental, and wellness programs.
- Most plans have provider networks, requiring enrollees to see in-network doctors to get full coverage.
- Plans typically have copays and deductibles for services instead of the Original Medicare coinsurance and deductibles.
- Enrollees usually must get pre-approval for certain services and follow plan rules.
Benefits and limitations of Medicare Advantage Plans
- Lower out-of-pocket costs for prescriptions, dental, vision, hearing services
- Coverage of fitness programs, transportation to appointments
- Coordination of care and integrated electronic records with in-network providers
- Caps on annual out-of-pocket spending amounts
- More restricted provider choice due to network requirements
- Need for pre-approvals and referrals to see specialists
- Penalties for going out of network for care without proper authorization
- Confusion over differing plan rules, coverage details
Medicare Supplement Plans
Medicare Supplement insurance, also called Medigap, can be a good option for filling coverage gaps in Original Medicare. Here is an overview of what Medicare Supplement Plans are, the benefits they offer, and how to choose one.
What are Medicare Supplement Insurance plans?
Medicare Supplement insurance plans are sold by private insurance companies and are designed to cover some healthcare costs not paid by Original Medicare Parts A and B. They help pay for things like copayments, coinsurance, and deductibles. Some plans may also cover certain services Medicare does not cover, like emergency medical care abroad.
Also called Medigap Plans, Medicare Supplement Plans are standardized by the government into 10 lettered options (Plans A, B, C, D, F, G, K, L, M, and N). Each plan must offer certain exact benefits regardless of the insurance company offering it.
Coverage and benefits of Medicare Supplement Plans
Though benefits are standardized across companies, Medicare Supplement Plan costs can vary greatly by location and provider. Here are some common benefits offered:
- Medicare Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are exhausted
- Medicare Part B coinsurance or copayment
- First three pints of blood used in a medical procedure
- Hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Emergency medical care abroad (up to plan limits)
- Annual out-of-pocket limit for Parts A and B copayments and coinsurance
Choosing the right Medicare Supplement Plan
When selecting a Medicare Supplement Plan, consider your expected healthcare needs and budget. Plans with more coverage will have higher premiums. Consulting with a Medicare broker can help you find an optimal plan.
Key factors for choosing a plan include:
- Comparing premium costs in your location for the level of benefits needed
- Selecting from a financially stable provider with strong customer service
- Understanding exclusions, limitations, and any underwriting guidelines
- Making sure doctors accept the plan if using a Medigap policy with a network
Differences Between Medicare Advantage and Medicare Supplement Plans
Medicare Advantage and Medicare Supplement Plans both provide ways to get more coverage beyond Original Medicare, but there are some significant differences between how the two options work.
Understanding the primary differences
- Plans offered by private insurers approved by Medicare
- Covers all Part A and Part B benefits
- Often includes prescription drug coverage
- Uses provider networks and plan rules
- Premiums vary based on coverage and benefits
- Plans offered by private insurance companies
- Supplements Original Medicare coverage
- Helps pay Medicare deductibles, copays, and coinsurance
- Can use any doctor or provider that accepts Medicare
- Standardized plans with consistent benefits
Comparing costs and coverage
While plans have different costs and benefits, here are some key points for comparison:
- Premiums: Medicare Advantage premiums tend to be lower, but can have other out-of-pocket costs. Supplement premiums are usually higher, but cover more copays.
- Prescriptions: Many Medicare Advantage Plans include built-in Part D Plan drug coverage. Supplements do not cover prescriptions.
- Provider choice: Medicare Advantage Plans have restricted provider networks. Supplements allow access to any Medicare provider.
- Travel: Supplements offer coverage outside the plan’s service area. Medicare Advantage has limits outside the network.
- Out-of-pocket caps: Medicare Advantage Plans typically have annual out-of-pocket spending limits. Supplements do not have spending caps.
Considering personal needs and preferences
Deciding between the options depends on factors like budget, health status, provider preferences, travel plans, and more.
Medicare Advantage Plans may be preferred by those who:
- Want lower premiums and some coverage extras like vision and dental
- Prefer copays and deductibles over Original Medicare coinsurance
- Are comfortable using a set network of doctors and hospitals
Medicare Supplement Plans may be better for people who:
- Have frequent doctor appointments and medical costs each year
- Travel often and want national coverage
- Want freedom to choose any Medicare provider nationwide
- Prefer the consistency of standardized supplement benefits
Choosing Between Medicare Advantage and Medicare Supplement Plans
When enrolling in Medicare, one of the biggest decisions is whether to go with a Medicare Advantage Plan or a Medigap Supplement Plan. What’s best depends on your personal needs and preferences.
Evaluating individual healthcare requirements
Consider your own expected healthcare utilization and costs when choosing between the options:
- Do you see specialists or require frequent doctor visits and procedures? Original Medicare with a Supplement can provide lower out-of-pocket costs per visit or service.
- Do you take prescription medications that you need covered by Original Medicare? Many Advantage Plans include Part D drug benefits.
- Do you want extra benefits like dental, vision, or gym memberships? Advantage Plans often include these, while Supplements just cover Medicare copays and coinsurance.
- Do you travel frequently and want national coverage? Supplements allow access to any provider who accepts Medicare nationwide.
Considering financial implications
The costs between plans can vary significantly:
- Medicare Advantage Plans usually have lower premiums but have copays and deductibles for services. Maximum annual out-of-pocket limits provide financial protection.
- Medicare Supplements have higher premiums but cover copays, coinsurance and deductibles charged by Original Medicare. There are no annual dollar limits.
- Prescription drug costs need to also be factored in if choosing a Supplement. Costs vary greatly by drug needs and plan.
- Think about the full year’s expected healthcare expenses, not just premium costs, when estimating budgets.
Consulting with healthcare professionals for guidance
Speaking with a Medicare insurance broker or advocate can provide helpful guidance:
- They can clarify how benefits, costs, and coverage limitations work with each type of plan.
- They can assess your healthcare needs and provide plan recommendations that fit your usage and budget.
- They can explain confusing concepts like provider networks, drug formularies, service pre-approvals, and Medicare Plan star ratings.
- They can assist with enrollment, plan comparisons and rate quotes, and answering questions after enrollment.
Medicare Advantage and Medicare Supplement Plans both expand coverage beyond Original Medicare but work very differently. Key differences include provider networks, out-of-pocket costs, coverage while traveling, and extra benefits offered. Reviewing your own healthcare needs, finances, and lifestyle preferences is crucial for selecting the ideal plan during your enrollment period.
No two individuals have the exact same healthcare situations and concerns. Taking the time to understand Medicare Plan options, consulting knowledgeable experts, and evaluating personal priorities can help ensure you make the best Medicare coverage decision. Your chosen plan should provide the combination of affordability, convenience, and coverage that meets your needs and gives peace of mind.
We’re Here to Help
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Think65 a Call at (719) 301-1220. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.
What is the difference between Medicare Supplement or Medigap and Advantage Plans?
Medicare Supplement or Medigap Plans are private health insurance plans that help cover the gaps in Original Medicare, while Advantage Plans are comprehensive plans offered by private insurance companies that provide Medicare Part A and Part B coverage.
How do Medicare Supplement or Medigap Plans work?
Medicare Supplement or Medigap Plans work alongside Original Medicare. They help pay for certain out-of-pocket costs such as deductibles, copayments, and coinsurance that Medicare doesn’t cover.
What do Advantage Plans offer?
Advantage Plans offer a bundled package of Medicare Part A and Part B coverage, and usually include prescription drug coverage (Medicare Part D). They may also provide additional benefits like dental, vision, and hearing coverage.
Can I have both Medicare Supplement or Medigap and Advantage Plans?
No, you cannot have both Medicare Supplement or Medigap and Advantage Plans at the same time. You can only have one type of plan to supplement your Medicare coverage.
How do I choose between Medicare Supplement or Medigap and Advantage Plans?
The choice between Medicare Supplement or Medigap and Advantage Plans depends on your specific needs and preferences. Consider factors such as coverage, cost, provider networks, and additional benefits when making your decision.
Can I switch from Medicare Advantage to a Medicare Supplement or Medigap Plan?
Yes, you can switch from a Medicare Advantage Plan to a Medicare Supplement or Medigap Plan, but it’s important to note that there may be certain eligibility requirements and enrollment periods for making this switch.
What types of Medicare coverage do Medicare Supplement Insurance or Medigap Plans supplement?
Medicare Supplement or Medigap Plans supplement the coverage provided by Original Medicare (Medicare Part A and Part B). They do not work with Medicare Advantage Plans.
How do I enroll in a Medicare Advantage Plan or a Medicare Supplement or Medigap Plan?
To enroll in a Medicare Advantage Plan or a Medicare Supplement or buy a Medigap Plan, you can contact a licensed insurance agent who specializes in Medicare Plans. They can provide information and assist you with the enrollment process.
Can I switch from a Medicare Advantage Plan back to Original Medicare?
Yes, you can switch from a Medicare Advantage Plan back to Original Medicare during certain enrollment periods. It’s important to be aware of the specific rules and deadlines for making this switch.
What is the best Medicare Plan for me?
The best Medicare Plan for you depends on your individual needs and circumstances. Consider factors such as your health condition, budget, preferred doctors and hospitals, prescription medications, and other specific coverage needs when choosing the best plan for you.